The Bisra Stone Lime Co Ltd., Kolkata V. DCIT, Circle-5, Kolkata, Kolkata

ITA 1892/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1553 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 28-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Assessee Lawyers: T P KAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI WASE EM AHMED, AM] I.T.A NO. 1892/KOL/20 16 ASSESSMENT YEAR : 2003-0 4 THE BISRA STONE LIME CO. LTD. -VS.- D.C.I. T., CIRCLE-5, KOLKATA KOLKATA [PAN : AABCT 2118 C] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI T.P. KAR, AR FOR THE RESPONDENT : SHRI ARINDAM BHATTACHARJ EE, ADDL. CIT DATE OF HEARING : 08.02.2018. DATE OF PRONOUNCEMENT : 14.02.2018 ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 28.07.2016 OF C.I.T.(A)-2, KOLKATA RELATING TO A.Y.2003-04. 2. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE ORDER OF CIT(A) WHEREBY THE CIT(A) CONFIRMED THE ORDER OF THE AO IMPOSING PENAL TY ON THE ASSESSEE U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (ACT). 3. THE FACTS AND CIRCUMSTANCES UNDER WHICH PENALTY U/S 271(1)(C) OF THE ACT WAS IMPOSED ON THE ASSESSEE BY THE AO ARE AS FOLLOWS :- THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS O F MINING AND SALE OF LIMESTONE AND DOLOMITE. FOR A.Y.2003-04 THE ASSESSE E FILED RETURN OF INCOME DECLARING A LOSS OF RS.37,71,58,866/-. IN THE COMPUTATION OF TOTAL INCOME THE ASSESSEE ARRIVED AT LOSS DECLARED IN THE INCOME AFTER CLAIMING DEDUCTIO N OF A SUM OF RS.13, 23, 974/- UNDER THE HEAD MISCELLANEOUS EXPENSES WRITTEN OFF. UNDER SECTION 35E OF THE ACT AN ASSESSEE WHICH IS AN INDIAN COMPANY IF IT INCURS EX PENSES IN CONNECTION WITH 2 ITA NO.1892/KOL/2016 THE BISRA STONE LIME CO. LTD. A.YR.2003-04 2 PROSPECTING, EXTRACTION OR PRODUCTION OF ANY MINE RAL AFTER 31 ST DAY OF MARCH, 1970 TILL ACHIEVING COMMERCIAL PRODUCTION THEN SUCH AN ASSESS EE WILL BE ENTITLED TO DEDUCTION OF ALL EXPENSES INCURRED IN ANY ONE OR FOUR YEARS IMME DIATELY PRECEDING THE YEAR OF COMMERCIAL PRODUCTION. ALL EXPENSES RELATING TO PRO SPECTING OF ANY MINERAL OR DEVELOPMENT OF MINE OR OTHER NATURAL PRODUCTS WILL BE ALLOWED AS A DEDUCTION.. HOWEVER, THE EXPENDITURE CANNOT EXCEED THE INCOME E ARNED BY THE ASSESSEE IN THE PREVIOUS YEAR OF COMMERCIAL EXPLOITATION OF MINE O R OTHER NATURAL DEPOSITS. SINCE THE ASSESSEE IN THE PRESENT CASE HAD A NIL OR NEGATIVE INCOME THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S 35E OF THE ACT. THE AO THEREFORE DI SALLOWED CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 35E OF THE ACT. ACCORDINGLY LOSS WAS DETERMINED BY THE AO AS FOLLOWS :- TOTAL LOSS AS PER RETURN FILED RS.(-)37,71,58,8 66/- ADD: DEDUCTION CLAIMED U/S 35E (AS DISCUSSED ABOVE) RS.(+) 13,23,974/- TOTAL LOSS RS.(-)37,58,34,892/- 5. IN RESPECT OF DISALLOWANCE OF DEDUCTION U/S 35E OF THE ACT, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND IM POSED PENALTY ON THE ASSESSEE HOLDING THAT THE ASSESSEE CONCEALED PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. ON APPEAL BY THE ASSESSEE TH E CIT(A) CONFIRMED THE ORDER OF AO. HENCE THIS APPEAL BY THE ASSESSEE BEFORE THE TR IBUNAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. COU NSEL FOR THE ASSESSEE SUBMITTED THAT MERE DISALLOWANCE OF EXPENSES FOR THE REASON T HAT THE ASSESSEE DID NOT HAVE POSITIVE INCOME CANNOT SAID TO BE EITHER FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF INCOME. THE LD. COUNSEL P OINTED OUT THAT EVEN THE AO ACCEPTED THE FACT THAT THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION U/S 35E OF THE ACT AND IT IS ONLY BECAUSE OF AN EXCEPTION IN SECTION 35E(4)(B) OF THE ACT THAT IN THE CASE OF NIL INCOME DURING THE RELEVANT PREVIOUS YEAR DE DUCTION WILL NOT BE ALLOWED, THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED. THE LD. COUNSEL R ELIED ON THE DECISION OF THE HONBLE 3 ITA NO.1892/KOL/2016 THE BISRA STONE LIME CO. LTD. A.YR.2003-04 3 SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS LTD. 322 ITR 158 WHEREIN IT WAS HELD THAT A MERE MAKING OF A CLAIM WHICH IS NOT ACCEPTED BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCO ME OR CONCEALING PARTICULARS OF INCOME. THE LD. DR RELIED ON THE ORDER OF THE AO. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN OUR VIEW THIS IS NOT A FIT CASE FOR IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. AS RIGH TLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, THERE IS NO DISPUTE IN THE PRESENT CA SE THAT THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION U/S 35E OF THE ACT. THEREFORE THE C LAIM FOR DEDUCTION BY THE ASSESSEE CANNOT SAID TO BE FURNISHING INACCURATE PARTICULARS OF INCOME. IT IS ONLY BECAUSE OF THE PROVISION OF SECTION 35E(4)(B) OF THE ACT WHICH LAY S DOWN A RESTRICTION THAT THERE SHOULD BE POSITIVE INCOME FOR ALLOWING DEDUCTION U/ S 35E OF THE ACT THAT THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE AO. THE FACT THAT THE CLAIM OF THE ASSESSEE IS REJECTED BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS REL IANCE PETROPRODUCTS LTD.(SUPRA) CLEARLY SUPPORTS THE STAND TAKEN BY THE ASSESSEE. W E THEREFORE HOLD THAT PENALTY IMPOSED IN THE PRESENT CASE DESERVES TO BE CANCELLED AND DI RECT THE AO TO CANCEL THE PENALTY IMPOSED. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE COURT ON 14.02.2018 SD/- SD/- [WASEEM AHMED] [ N. V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL M EMBER DATED : 14.02.2018 [RG SR.PS] 4 ITA NO.1892/KOL/2016 THE BISRA STONE LIME CO. LTD. A.YR.2003-04 4 COPY OF THE ORDER FORWARDED TO: 1. THE BISRA STONE LIME CO. LTD.AG-104, SOURAV ABAS AN SAL LAKE SECTOR-2, KOLKATA- 700091. 2. D.C.I.T., CIRCLE-5, KOLKATA. 3. CIT(A)-2, KOLKATA 4. C.I.T.-2, KOLKAT A. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECR ETARY HEAD OF OFFICE/ D.D.O., ITAT KOLKATA BENCHES